How self-driving vehicles will soon impact your taxes

August 22, 2017

Self-driving of the future will use less fuel—and in some cases none at all—which could leave some states pining for revenue to finance infrastructure updates funded by gas taxes.

Last year, Michigan adopted higher registration fees for hybrid and electric vehicles in an effort to account for the a reduction in gas tax revenue. Now, lawmakers in at least two states are specifically targeting self-driving technologies as they attempt to do the same.

A bill currently making its way through the Massachusetts state legislature would make self-driving vehicles subject to a tax of 2.5 cents per-mile. That’s in addition to any fuel tax they may accrue.

The proposed tax change in Massachusetts, like similar measures in Tennessee and Oregon, is just the beginning, as public policy begins to come to grips with how self-driving technologies will impact the ways in which traffic operates.

According to Paul Lewis, of the D.C.-based Eno Center for Transportation, a change in the way vehicles are taxed is logical: “Self-driving cars tend to be very fuel-efficient, and a lot of automakers have talked about how they are going to be all-electric,” Lewis told the Detroit News. “That means they are imposing the same type of wear and tear on roadways without paying into the system.”

Former Federal Highway Administrator Mary Peters predicts a significant reduction in revenue not only from fuel taxes, but fewer parking and traffic citations as well. As self-driving vehicles increase, per Peters, the driverless cars will treat traffic laws with near-perfect obedience.

Peters cites the pending widespread change as a reason to switch to a system based on the total number of miles each vehicle drives, known as a VMT, or Vehicle Miles Traveled tax. Similar proposals have traditionally failed to get off the ground, with proponents arguing their economic benefit, while opponents cite concerns over privacy.

Regardless, the pending budget changes are drastic. The National Motorists Association, an advocacy group for drivers, points to a study of the 25 largest cities in America, in which the anticipated revenue shortfall from self-driving vehicles could top $5 billion annually.

-- by Aaron Miller

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